Global trade to pickup in 2024 but ‘downward risks’ remain: WTO

Global goods trade is expected to pickup gradually this year following a contraction in 2023, the World Trade Organisation (WTO) says in its latest forecast. The WTO forecast says the volume of world merchandise trade should increase by 2.6% in 2024 and 3.3% in 2025 after falling 1.2% in 2023. However, it has cautioned that regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial “downside risks” to the forecast.

In its report, “Global Trade Outlook and Statistics”, the WTO economists say inflationary pressures are expected to abate in 2024, allowing real incomes to grow again — particularly in advanced economies. It, in turn, will provide a boost to the consumption of manufactured goods. "A recovery of demand for tradable goods in 2024 is already evident, with indices of new export orders pointing to improving conditions for trade at the start of the year."

WTO Director-General Ngozi Okonjo-Iweala says the world is making progress towards global trade recovery, thanks to resilient supply chains and a solid multilateral trading framework. "It's imperative that we mitigate risks like geopolitical strife and trade fragmentation to maintain economic growth and stability."

India's goods exports stood at $451 billion in FY23 and $394.99 billion in FY24 so far (April-February). The country's share in global goods exports and imports stood at 1.8% and 2.8% in 2023, respectively.

In the year 2023, high energy prices and inflation continued to weigh heavily on demand for manufactured goods, resulting in a 1.2% decline in world merchandise trade volume for 2023, WTO data says. The decline was larger in value terms, with merchandise exports down 5% to US$24.01 trillion. Trade developments on the services side were more upbeat, with commercial services exports up 9% to US$ 7.54 trillion, partly offsetting the decline in goods trade.

The WTO says the global GDP growth at market exchange rates will remain mostly stable over the next two years at 2.6% in 2024 and 2.7% in 2025, after slowing to 2.7% in 2023 from 3.1% in 2022.

Explaning the downside risks, the WTO report says food and energy prices could again be subject to price spikes linked to geopolitical events. "While the economic impact of the Suez Canal disruptions stemming from the Middle East conflict has so far been relatively limited, some sectors, such as automotive products, fertilisers and retail, have already been affected by delays and freight costs hikes.”

With geopolitical tensions affecting trade patterns marginally, the report says the global trade in non-fuel intermediate goods — which provides a useful gauge of the status of global value chains — was down 6%.

In its regional trade outlook, the WTO says if current projections hold, Africa's exports will grow faster than those of any other region in 2024, up 5.3%; this however is from a low base, since the continent's exports remained depressed after the COVID-19 pandemic. "Strong import volume growth of 5.6% in Asia and 4.4% in Africa should help prop up global demand for traded goods this year."

In services trade, the WTO says world commercial services trade grew 9% in 2023 despite a decline in freight transport, thanks to recovering international travel and surging digitally delivered services. In 2024, sports events to be held in Europe in the summer, as well as the easing of visa requirements by various countries, are expected to boost tourism and passenger transport.